The takeover offers that sent shares in Nuplex Industries and Diligent Corporation soaring yesterday could be a sign of things to come as overseas investors identify value in NZX-listed companies, say market players.
Resin maker Allnex Belgium, controlled by US private equity firm Advent International, is proposing a buyout of Nuplex at $5.55 a share - a 44 per cent premium to the stock's closing price on Friday.
The offer is being made via a scheme of arrangement, meaning it will be put to a shareholder vote rather than through the acquisition of more than 90 per cent of shares in the Sydney specialty chemicals manufacturer, as would have been required in a conventional takeover.
Nuplex shares closed up 30 per cent at $5, an eight-year high.
Meanwhile, US investment firm Insight Venture Partners has entered an agreement to acquire corporate governance software developer Diligent at US$4.90 ($7.39) a share - a 31 per cent premium to the pre-announcement price.
New York-based Diligent's shares closed up 27 per cent at $7.14, the highest since June 2013.
Diligent, which creates software used by company directors for board meetings, listed at $1 a share and raised $24 million through its IPO in December 2007. Its shares have closed as low as 7c and as high as $8.20 since then.
The boards of Diligent and Nuplex have given their support to the respective offers. MSL Capital Markets managing director Andrew McDouall, whose firm was lead manager in Diligent's initial public offering, said the takeovers that emerged yesterday showed the weakening of the kiwi dollar, combined with sustainable earnings, had made many NZX-listed firms attractive to potential overseas buyers.
"More takeover activity is likely. With a whole lot of money looking for a home globally, any business with sustainable earnings is going to be under the microscope."
Harbour Asset Management portfolio manager Shane Solly said the Nuplex and Diligent takeovers highlighted the underlying value in parts of the New Zealand sharemarket.
Given the relatively low cost of funding and a lack of growth opportunities for some companies, it wasn't unreasonable to expect more takeovers to emerge this year, said Solly, whose firm holds shares in Diligent.
McDouall, who tipped the potential for "corporate activity" around Diligent in December in the Business Herald's annual Broker Picks feature, said he wasn't surprised to hear of the takeover deal. The company was sitting on cash reserves of close to $100 million, he said, which made it attractive to potential buyers.
"If you take out the whole company you probably have enough cash in there to pay for two or three years' interest," McDouall said. "We've been anticipating this for some time."
He said the premium offered by Insight appeared appropriate "on the face of it".
"But shareholders should not do anything until they see [full-year] results due on February 29 and the potential emergence of other bids."
The deal, expected to close in the second quarter of this year, is subject to approval from a majority of Diligent investors and at least 60 per cent of preference shareholders, as well as regulatory approval.
The holders of Diligent's preference shares, including Spring Street Partners, Diligent's largest shareholder, have entered voting agreements in support of the deal.
Nuplex was founded as a flooring distributor in Auckland in 1952 and listed on the sharemarket in 1967.
Rich lister-linked entities in line for $26m
Businessman Peter Huljich and entities linked to him are set for a $26 million pay out if the Diligent Board Member Services takeover goes ahead.
"We'll be selling," Huljich told the Herald yesterday.
"Obviously, it's been a bit of a roller-coaster ride and we're quite happy to get off here."
Huljich-linked entities own about 4 per cent of Diligent, he confirmed yesterday.
Given New York-based Insight Venture Partners' offer of US$4.90 ($7.39) a share, that stake would be worth about $26 million.
The deal, endorsed by the company's board, still requires shareholder approval.
"We were the sole provider of the pre-IPO funding, we funded the company into listing. We've been in there from [the listing price of] $1 all the way down to 7c at one stage and then all the way back up to $8.20 and now US$4.90, which is $7.40 or thereabouts," Huljich said.
Huljich is a former director of Diligent, which develops software used by board directors to access documents.
The Huljich family is valued at $165 million on the National Business Review's rich list.